BHN review: Hotel Investment Conference Europe 2019

Eloise Hanson By Eloise Hanson
27 September 2019 | Updated 27 September 2019

London: This year’s Hot.E conference looked at the political, economical, and cultural pressures that the hotel industry is facing in Europe.

Produced by Northstar Travel Group in association with Burba Hotel Network (BHN), the event saw hoteliers, investors, bankers and analysts, all convene at the Hilton London Bankside to discuss the current and future landscape of the hotel sector. 

The uncertain climate of Brexit has provoked many in the real estate investment market to rethink strategies. As Gaël Le Lay, deputy CEO at COVIVIO pointed out, the heightened anxieties surrounding Brexit can affect hotel diversification. "The French did not want to invest in the UK," Le Lay remarked, adding that it was a risk to transform assets.

Karin Sheppard, managing director for Europe at IHG, echoed this sentiment. Despite receiving praise on IHG's selective investments, she warned that investors need to be cautious and reinforced the need for strong business partners. "The focus is on managing through volatility," said Sheppard, advising that growth is best sought with partners that are predominantly franchises.

Meanwhile, managing director at Starwood Capital, Cody Bradshaw, commented on the resilience of London amid the political turbulence. "From chaos comes opportunity," he stated, placing the UK capital as the "best destination" at the moment in terms of its potential.

Such a statement is backed by data from STR. Managing director Robin Rossmann showed that supply in London is 2.1 per cent less than demand, whereby the city saw ADR increase by 10 per cent in June. Although occupancy levels soon after dipped, STR forecasted a recovery of London's occupancy to around 41 per cent in the next three months, predicting a relatively stable RevPAR over the next year.

Other key findings include:

  • Germany's supply has grown consistently across the region. Munich topped the chart at 16 per cent supply growth, with an expected one per cent decrease in RevPAR by 2020.
  • The number of rooms opening in Amsterdam is estimated at 8.9 per cent over 2019-20, compared to Brussels at 1.4 per cent. Rossmann believed this may be offset with decisions to regulate the number of tourists respectively.
  • Over the last decade, Milan and Rome have gradually recovered from a downward turn in RevPAR, with a forecasted 0.5 per cent increase from current by 2022.
  • Russia's capital, Moscow, outperformed all major cities with a soaring 225 per cent increase in RevPAR between June and July of this year. Occupancy remains strong at around 85 per cent with ADR fetching slightly more than 2013 rates.

Overall, however, 2019 indicates a turning point for European markets as supply growth accelerates and demand weakens. In terms of navigating the terrain, Rohit Talwar, CEO of Fast Future, delivered an insightful presentation on best practice for coming investments. Statistics aside, he emphasised the importance of assessing managerial competence by means of the organisation's digital capabilities, the ability to innovate and pre-empt risks in business models, and the level of investment in the employee-customer relationship.

Similarly, engagement with the workforce - particularly young persons or new employees - became a hot topic amongst hospitality executives. Nikola Reid, head of hospitality advisory at Deloitte, said: "When we look at millennials, we see broad beams in terms of what they're looking for, but it's important to learn what they want and what motivates them. We need to empower millennials to allow themselves to think that they are making a difference."

Carine Bonnejean, managing director at Christie & Co, shared news that the company has created a shadow committee comprising of millennials, whereas Jan Hazleton, VP at Kerzner International, encouraged the younger generations to actively seek mentors in the industry.

It became apparent that leaders are increasingly open to change in the face of unpredictability. The political, economic, and cultural climate currently stands in limbo, and key players are beginning to rethink and reimagine the traditional structures and strategies.

This is evident in the Hot.E Deal of the Year award winners. The Westin Paris in Vendôme, France, was named Transaction of the Year. Henderson Park acquired the asset in October 2018 from GIC, having identified the chance to undertake a repositioning programme for the landmark property. The acquisition marked one of the largest, single-asset European hotel transactions in recent history.

Minor International (MINT) was named Merger & Acquisition/Portfolio of the Year for its winning of NH Hotel Group back in October 2018. MINT tactically deployed a wealth of tools during the transaction, including undisclosed retail-lot accumulation, strategic block trade (hedge fund stake), conditional purchase agreements (Chinese group), active offensive and defensive campaigns, forward purchase public announcement and target engagement.

For more information about the Hot.E conference, including its awards, speakers and delegates, click here.

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